The history of residential real estate in Australia is, in one sense, a story of defiance.
Economists and journalists keep predicting dire outcomes and property markets keep proving them wrong. 2023 has provided a wonderful case study for that.
The year began with a plethora of predictions from the usual suspects – senior economists working for the Big 4 banks, the nation’s worst real estate forecaster Shane Oliver from AMP Capital, and a host of others.
The common feature of their forecasts was that prices, they said, would fall in 2023.
Some, like NAB, predicted big price decline. NAB said in January that house prices would drop 23% in 2023, while Me Bank said prices would drop 20%.
A survey of 31 economists by the AFR in January came up with an average forecast of prices dropping 15% in 2023.
Shane Oliver of AMP Capital was another who said in January that prices would fall significantly this year.
Major Fairfax newspapers like the Sydney Morning Herald ran an article in late December which started with these words:
Australia’s housing market is hurtling headlong into a correction which could burst the property bubble and financially ruin families.
At the same time, The Courier-Mail in Brisbane started an article like this …
BRISBANE’S property market is headed for a bloodbath in 2023
… quoting a limelight-seeking valuer who is prone to sensational statements to generate free publicity.
Hotspotting, on the other hand, forecast solid, moderate growth in most locations.
As we have seen in the year to date, the high-profile economists and the sensationalist media got it wrong – again – and we got it right.
Westpac, which started the calendar year with a prediction of big decreases in property prices, is now forecasting a 7% rise in property prices, as the average outcome across the nation.
One of the clues that bank forecasts are generally worthless is that they keep updating them every few months.
The latest update from Westpac is that prices will show fairly strong growth in 2023.
You will note that we are two thirds of the way through the calendar year and the Big 4 bank is essentially predicting what has already happened.
It now thinks Sydney will rise 10%, Perth 8%, Melbourne 4% and Brisbane 6%.
Westpac is essentially taking what’s already happened in the first seven months of the calendar and extrapolating it forward for the remaining few months of the year.
You could teach a monkey to do what bank economists do in this regard, but I suspect a trained monkey would be accurate, more often, than the boffins at the Big 4 banks.
And, increasingly, belatedly, at last, writers and commentators are starting to ask the question: Should we be listening to these turkeys?
So, as we approach Spring, residential real estate is generally looking pretty strong.
Prices have been nudging upwards in most major markets since the start of the year.
In the July quarter, according to CoreLogic, the combined capital cities grew their house prices 3.7%, led by 5.1% in Sydney, 4.2% in Brisbane and around 3.5% in both Perth and Adelaide.
Apartments have also been delivering growth, up 2.7% in the July quarter, led by price rises above 3% in Brisbane, Perth and Sydney.
Looking at the latest data from PropTrack, in the past 12 months most market jurisdictions across the nation have recorded growth in dwelling values.
Perth is up 6.5% and Adelaide is up 6%, with Sydney and Brisbane showing more moderate increases, while some of the regional markets have also shown good growth, including Western Australia, South Australia and Queensland.
These figures do not generally depict booming markets, nor would we expect them to.
It’s steady, moderate, sustainable growth in property prices, which is what Hotspotting forecast at the start of the year.